HW 5 (1).pdf - Homework 5 1 What is the best definition of net worth a special type of assets a special type of liability assets liabilities 2 All

HW 5 (1).pdf - Homework 5 1 What is the best definition of...

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Homework 5 1. What is the best definition of net worth? a special type of assets a special type of liability assets - liabilities 2. All semester we've talked about money. In this part of the course, we simplify things a bit by assuming that there is no cash or currency (in the next course you look at adding that in). We are also using balance sheets extensively. Thus, on a bank balance sheet, money is ___ and on a household balance sheet it is ___ an asset, an asset an asset, a liability an asset, a form of net worth a liability, an asset a liability, a liability a liability, a form of net worth a form of net worth, an asset a form of net worth, a liability a form of net worth, a form of net worth 3. Suppose a bank has $5 M in reserves, $200 M in loans made to its customers, and its customers have $200 M on deposit with this bank. In addition, the required reserve ratio (RR) is 5%. This bank ___ bankrupt and it ___ have sufficient reserves to meet its reserve requirement. is, does is, does not is not, does is not, does not 4. Understanding balance sheets of households and banks is critical for this part of the course (and understanding household balance sheets is critical for your financial health). Below are several items that appear on balance sheets. Which of the following is an asset for a bank and a liability for a household? There might be more than one answer.
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